Cell C says turnaround strong in H2

23rd March 2020

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Embattled mobile operator Cell C on Monday said its turnaround strategy resulted in a strong second half performance during the year ended December 31.

The group’s turnaround strategy, which was implemented in March last year, was now starting to bear fruit, said Cell C CEO Douglas Craigie Stevenson during a webcast of the group’s financial year-end results.

“Operationally, the business is stronger and a successful recapitalisation will secure the long-term sustainability of Cell C,” he said.

Cell C posted a full year operating loss of R3.94-billion in 2019, compared with the 2018 losses of R7.36-billion.

For the full year under review, earnings before interest, taxes, depreciation and amortisation (Ebitda) contracted 15% to R2.5-billion.

“Comparing the first six months to the last six months of 2019, gross profit increased by 9% and Ebitda more than doubled to R1.7-billion. Excluding impairments, the mobile operator made a profit of R705-million, before interest and tax, in the last six months of 2019.”

Gross operating income was 9% up at R3.8-billion during the second half of 2019.

Further, R522-million was saved during the past six months and operating expenses were 18% lower, at R2.4-billion, when comparing the first half of 2019 with the preceding half-year.

Meanwhile, revenue levels during the year under review remained steady at R15.2-billion, with service revenue contracting 1% to R14.2-billion.

“Although there was a decrease of 2.9-million prepaid customers – a 21% drop – in the 12 months to 2019, the margin on our existing customers is better as a result of acquiring profitable customers and not signing on a customer at any cost.

The company had 14.4-million total subscribers for the year, a decline on the 17.2-million posted in the prior year.

“Revenue from equipment sales, on a year-on-year basis, was 27% down as we moved away from subsidising customers at all costs. This enabled us to build a quality customer base with better margins and quality of service,” explained Cell C CFO Zaf Mahomed.

Craigie Stevenson added that Cell C was now an operationally sound business that is financially viable and competitive.

“The business performance allows for a successful recapitalisation to take place with a sustainable debt profile.

“We are optimistic that the hard work of fixing the operations prepares us to conclude the recapitalisation and to continue to be a customer champion delivering innovative service offerings,” he concluded.

Edited by Creamer Media Reporter

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